Allowance under section 10(14)

The following Act of the Legislature of the State of Haryana received the assent of the Governor of Haryana on the 26th February 2021 and is hereby published for general information

This Act may be called the Haryana State Employment of Local Candidates Act, 2020
It extends to the whole of the State of Haryana
It shall come into force on such date, as the Government may, by notification in the Official Gazette, specify
This Act applies to all the Companies, Societies, Trusts, Limited Liability Partnership firms, Partnership Firm and any person employing ten or more persons and an entity, as may be notified by the Government, from time to time
It shall cease to have an effect on the expiry of ten years from the date of its commencement, except as respect to the things to be done or omitted to be done before such cesser, and upon such cesser section 6 of the General Clauses Act, 1897 (Central Act 10 of 1897), shall apply as if this Act had then been repealed by a Central or State Act, as the case may be.

Employer” means a Company registered under the Companies Act, 2013 (Central Act 18 of 2013) or a Society registered under the Haryana Registration and Regulation of Societies Act, 2012 (1 of 2012) or a Limited Liability Partnership Firm as defined under the Limited Liability Partnership Act, 2008 (Central Act 6 of 2009) or a Trust as defined under the Indian Trust Act, 1882 (Central Act 2 of 1882) or a Partnership Firm as defined under the Indian Partnership Act, 1932 (Central Act 9 of 1932) or any person employing ten or more persons on salary, wages or other remuneration for the purpose of manufacturing or providing any service or such entity, as may be notified by the Government from time to time, but shall not include the Central Government or the State Government or any organization owned by the Central Government or the State Government;

Compulsory registration

On and from the date of commencement of this Act, every employer shall register such employees receiving a gross monthly salary or wages not more than fifty thousand rupees or as notified by the Government, from time to time, on the designated portal, within three months of coming into force of this Act
Provided that no person shall be employed or engaged by any employer till the registration of all such employees is completed on the designated portal

Recruitment of local candidates.

After the commencement of this Act, every employer shall employ seventy-five percent of the local candidates with respect to such posts where the gross monthly salary or wages are not more than fifty thousand rupees or as notified by the Government, from time to time
Provided that the local candidates may be from any district of the State, but the employer may, at his option, restrict the employment of local candidates from any district to ten percent of the total number of local candidates
Provided further that no local candidate shall be eligible to avail of the benefits under this Act unless he registers himself on the designated portal

Exemption

(1) The employer may claim exemption from the requirement of section 4, where an adequate number of local candidates of the desired skill, qualification or proficiency is not available by applying to the Designated Officer in such form and manner, as may be prescribed.

(2) The Designated Officer shall, after such inquiry, as he deems fit and after evaluating the attempt made by the employer to recruit local candidates of the desired skill, qualification, or proficiency, may either-

(i) accept the claim of the employer for exemption from the provisions of section 4; or

(ii) reject the claim of the employer for an exemption for reasons to be recorded in writing; or

(iii) direct the employer to train local candidates to achieve the desired skill, qualification, or proficiency.

(3) Every order made by the Designated Officer under sub-section (2), shall be placed on the website of the Government.

Employer to furnish report

Every employer shall furnish a quarterly report, by such date, as may be notified by the government in the Official Gazette, of the local candidates, employed and appointed during that quarter on the designated portal in such form, as may be prescribed

Penalties

Section 3 (Compulsory registration)

If any employer contravenes the provisions of section 3 of this Act or of any rules made thereunder or of any order in writing given thereunder, he shall be guilty of an offense punishable with the penalty which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees and if the contravention is still continued after conviction, with a further penalty which may extend to five hundred rupees for each day till the time contravention is so continued.

Section 4 (Recruitment of local candidates)

if any employer contravenes provisions of section 4 or of any rules made thereunder or of any order in writing given thereunder, he shall be guilty of an offense punishable with the penalty which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and if the contravention is still continued after conviction, with a further penalty which may extend to one thousand rupees for each day till the time contravention is so continued.

Section 5(Exemption)

If any employer disobeys any order in writing made by the Designated Officer under section 5, he shall be guilty of an offense punishable with the penalty which shall not be less than ten thousand rupees but which may extend to fifty thousand rupees and if the contravention is still continued after conviction, with a further the penalty which may extend to one hundred rupees for each day till the time contravention is so continued.

Notification:- THE HARYANA STATE EMPLOYMENT OF LOCAL CANDIDATES ACT, 2020

Meaning of allowance

Allowance is generally defined as fixed quantity of money or other substance given regularly in addition to salary for the purpose of meeting some particular requirement connected with the services rendered by the employee or as compensation for unusual conditions. It is fixed, pre-determined and given irrespective of actual expenditure

Under income tax act for exemption purpose allowances are categorized under three heads. One of the commonly used category is allowances which are based on actual amount expended by an employee. Here an attempt is made to understand types & nature of such allowances and per se the extent of exemption available for these allowances.

Special allowance prescribed as exempt under section 10(14)

When exemption depends upon actual expenditure by the employee – The following allowances are exempt under section 10(14) to the extent the amount is utilised for the specified purpose for which the allowance is received . In other words, in the cases given below the amount of exemption under section 10(14) is_

The amount of the allowance ; or
The amount utilised for the specific purpose for which allowance is given,

whichever is low .

Exemption is available on the aforesaid basis in the case of following allowances-

Name of the allowance	Nature of allowance
Travelling allowance/transfer allowance	Any allowance (by whatever name called) granted to meet the cost of travel on tour or on transfer(including any sum paid in connection with transfer, packing and transportation of personal effects on such transfer).
Conveyance allowance	Conveyance allowance granted to meet the expenditure on conveyance in the performance of duties of an officeNote pls.: Expenditure for covering the journey between office and residence is not treated as expenditure in performance of duties of the office and, consequently, such expenditure is not exempt from tax under this section. This allowance is covered separately under “Transport allowance” where a fixed exemption up to Rs 800 per month is given to such allowances in case of all employees. However, with introduction of finance act 2015 such exemption is increase to Rs. 1600 per month with prospective effect. Example: Conveyance allowances given to an employees for travelling done by employee for attending income tax hearing for presenting income tax hearing
Daily allowance	Any allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
Helper allowance	Any allowance (by whatever name called) to meet the expenditure on a helper where such helper is engaged for the performance of official duties.
Research allowance	Any allowance (by whatever name called) granted for encouraging the academic research and other professional of official duties.
Uniform allowance	Any allowance (by whatever name called) to meet the expenditure on the purchase or maintenance of uniform for wear during the performance of duties of an office.Pls. note: Benefit under this allowance can be taken only when a specific uniform is prescribed for office duties.

As stated earlier, the amount of exemption in the above cases is the amount of allowance or the expenditure incurred for the specific purpose for which allowance is given,whichever is lower.

Kindly attention:

It is not open to the Assessing Officer to call for the details of expenses actually incurred by the assessee unless the allowances are disproportionately high compared to the salary received by the assessee or unreasonable with reference to the nature of the duties performed by the assessee.

So as far as allowance given are in normal proportion to the gross salary given to employee, employee need not to maintain the account and kept documents to proof is stand of actual expenses incurred for the aforesaid purpose. A simple declaration is enough to claim such exemption.

Case study

During the previous year 2013-14, the following allowances are given to X by the employer company –

Nature of allowance	Amount of allowance	Amount actually spent	Amount Chargeable
Traveling allowance for official purpose	36,000	32,000	4,000
Transfer allowance given at the time of transfer of Mr. X from Delhi to Ajmer	40,000	41,000	–
Conveyance allowance for official purpose	50,000	42,000	8,000
Helper allowance for engaging helper for official purpose	68,000	64,000	4,000
Research allowance	100,000	90,000	10,000
Uniform allowance for official purpose	18,000	17,000	1,000
Total	312,000	286,000	27,000

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